We refer to financial goals as investments, savings, and targets for spending.
Financial goals are put in place for you to make achievements over the short, mid, and long-term.
We determine our goals by our current stage of life, but no matter what, it is paramount that we have goals of some kind.
Add Goals to Your Financial Plan
Setting goals to plan for your retirement requires you to consider all 3 types. These are short-term, mid-term, and long-term goals.
- The most important short-term goals include budget planning. They also include debt reduction and saving for an emergency fund.
- Medium-term goals usually include insurance policies.
- Your long-term goal is mostly about planning for your retirement.
According to FINRA (The Financial Industry Regulatory Authority), long-term goals are over 10 years. FINRA defines mid-term goals as 3 to 10 years, and short-term goals under 3 years.
Financial goals are more than investments, and setting time frames for saving enables you to strategize and build up your intellectual toolkit to reach your goals.
Long-Term Financial Goals and Their Benefits
Long-term goals often encompass short-term and mid-term goals. These goals usually stretch far into the future, with examples include paying off your home mortgage. They also include a retirement plan.
Long-term goals broken into bite-size pieces are more attainable. They are also more realistic.
Short-Term Financial Goals and Their Benefits
Short-term financial goals also play an important role in financial goal setting. It might be a dream holiday or a new car; something more immediate that you want to attain in the next 1-3 years. It is important to have a definite picture of your short-term goals.
Setting specific goals is important. These goals are good for the psyche, giving each goal a definite name is vital. This will encourage us to picture the future as events that will actually happen. It helps us visualize what a future goal can look like.
Mid-Term Financial Goals and Their Benefits
Mid-term financial goals, on the other hand, could include an annuity. The annuity could then provide you with income for life. It could also help improve your credit score.
Perhaps you have always dreamed of starting your own business; your annuity could help get your start-up off the ground.
Tip: Hire a financial expert to help you plan. Let your financial professional guide you and find ways for you to earn a passive income stream.
Mid-term goals are between 3 to 10 years, they are your stepping stones towards achieving your long-term goals from your short-term ones.
What Would My Financial Goals Typically Include?
- Saving to reach your mid-term and short-term goals.
- Plan for your retirement.
- Build and improve your credit score.
- Improve your understanding of your finances.
Why Should I Set Goals for My Financial Future?
Writing a concise plan for your financial goals is like creating a vision board. You have a stronger chance of attaining your goals when putting them down in a tangible format. A tangible goal is easier to track: This concept applies as much to the captain of the football team as it does to the CFO of a large corporation.
Tracking your progress will help you reach your short-term goals. It helps you remain relevant and motivated. Having tangible goals helps you to reach your mid-term and long-term goals, especially after you start seeing results from tracking your short-term successes.
Reviewing your financial goals from time to time will also help you make smart financial decisions. This action will enable you to adjust your goals to fit into your current financial situation.
Another important factor in setting financial goals is that doing so decreases stress levels. Individuals have lower stress levels when they face their financial status head-on, instead of letting worries grow at the thought of an uncertain progression towards enhancing your life
How Do Financial Goals Shape Your Future?
Your financial goals play a vital role in influencing the actions you take today. These are for a better tomorrow.
Is your goal to pay off that debilitating credit card debt? Or is it to pay your mortgage off? Think about cutting back on takeout meals and coffees and reallocating those funds towards future payoff. Use that money to make extra payments on debt.
These bite-sized goals are attainable and realistic. Plus, they will make a dent in your debt. Without goal setting, you would probably continue spending while your debt adds up. Writing down what you want and how to get there gives you a roadmap to follow.
Why You Need An Emergency Fund
Setting up an emergency fund will pay for unforeseen expenses that may suddenly crop up. Start small and gradually build it up to cover unexpected eventualities. It will add to your peace of mind to know you have at least something to fall back upon. COVID-19 is a good example where many individuals suffered losses because of the pandemic.
If you already have an emergency fund, you might instead need to replenish your funds if you have dipped into it. The standard advice is to save for a minimum of three months’ expenses to cover financial obligations. Note that this is if you are single. If you have a family, this should be six months’ worth.
Turning Your Trash into Cash
Build emergency savings by turning your trash into cash. Decluttering and selling off unwanted items will give you funds to grow your emergency funds.
You can make money by selling your unwanted items on eBay and Craigslist. Or by holding a yard sale. Do you have a talent or hobby that you could make extra money from? These are a few smart ideas that could help build that much-needed emergency fund.
But while you might have other financial goals, creating an emergency fund should be right at the top of your list. Your emergency fund offers the financial security you need to achieve your other financial goals.
Saddock Can Help You With All Goal Types
Let us help you with your financial planning— financial stability is important. This could mean a comfortable retirement or any number of lifestyle comforts. At Saddock Advisory, we pride ourselves on building long-term relationships, providing guidance you can trust. We are here to help solve financial problems to empower you towards financial success.
Schedule a meeting here to find out how you can achieve your financial goals through smart planning.